december 2019 - airtel india...2 disclaimer the information contained in this presentation is...

1

December 2019

22

Disclaimer

The information contained in this presentation is provided by Bharti Airtel Limited (the “Company”) to you solely for your reference. This document is being given solely for your information and for your use and may not be retained by you and neither this presentation nor any part thereof may be (i) used or relied upon by any other party or for any other purpose; (ii) copied, photocopied, duplicated or otherwise reproduced in any form or by any means; or (iii) redistributed, passed on or otherwise disseminated, to any other person without the prior written consent of the Company. Although care has been taken to ensure that the information in this presentation is accurate, and that the opinions expressed are fair and reasonable, the information is subject to change without notice, its accuracy is not guaranteed and has not been independently verified. No representation, warranty, guarantee or undertaking (express or implied) is made as to, and no reliance should be placed on, the accuracy, completeness or correctness of any information, including any projections, estimates, targets and opinions, contained herein, and accordingly, none of the Company, its advisors, representatives or any of its directors assumes any responsibility or liability for, the accuracy or completeness of, or any errors or omissions in, any information or opinions contained herein. None of the Company, its advisors, representatives and its directors, officers, employees or affiliates nor any other person accepts any liability (in negligence, or otherwise) whatsoever for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection therewith.

The statements contained in this document speak only as at the date as of which they are made, and the Company expressly disclaims any obligation or undertaking to supplement, amend or disseminate any updates or revisions to any statements contained herein to reflect any change in events, conditions or circumstances on which any such statements are based. By preparing this presentation, none of the Company, its management, and their respective advisers undertakes any obligation to provide the recipient with access to any additional information or to update this presentation or any additional information or to correct any inaccuracies in any such information which may become apparent. This document does not constitute or form part of and should not be construed as an offer to sell or issue or recommendation or solicitation of an offer to buy or acquire securities of the Company or its subsidiaries or affiliates in any jurisdiction or as an inducement to enter into investment activity. No part of this document, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. You acknowledge that you will be solely responsible for your own assessment of the market and the market position of the Company and that you will conduct your own analysis and be solely responsible for forming your own view of the potential future performance of the business of the Company. This document is not financial, legal, tax or other product advice.

This presentation contains statements that constitute forward-looking statements which involve risks and uncertainties. These statements include descriptions regarding the intent, belief or current expectations of the Company or its officers and information currently available with them including with respect to the consolidated results of operations and financial condition, and future events and plans of the Company. These statements can be recognized by the use of words such as “expects”, “plans”, “will”, “estimates”, “intends” or words of similar meaning. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ from those in the forward-looking statements as a result of various factors and assumptions. You are cautioned not to place undue reliance on these forward looking statements, which are based on the current view of the management of the Company on future events. No assurance can be given that future events will occur, or that assumptions are correct. Neither the Company nor its advisors or representatives assume any responsibility to amend, modify or revise any forward-looking statements, on the basis of any subsequent developments, information or events, or otherwise.

This presentation is not a prospectus, a statement in lieu of a prospectus, an offering circular, an advertisement or an offer document under the Companies Act, 2013, and the rules made thereunder, as amended, the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, as amended, the Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008, as amended or any other applicable law in India.

This presentation includes certain industry data and projections that have been obtained from industry publications and surveys. Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but there is no assurance that the information is accurate or complete. Neither the Company nor any of its advisors or representatives have independently verified any of the data from third-party sources or ascertained the underlying economic assumptions relied upon therein. All industry data and projections contained in this presentation are based on data obtained from the sources cited and involve significant elements of subjective judgment and analysis, which may or may not be correct. For the reasons mentioned above, you should not rely in any way on any of the projections contained in this presentation for any purpose.

The distribution of these materials in certain jurisdictions may be restricted by law and persons into whose possession these materials comes should inform themselves about and observe any such restrictions.

This presentation and the information contained herein does not constitute or form part of any offer for sale or recommendation or subscription of or solicitation or invitation of any offer to buy or subscribe for any securities of the Company, nor should it or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever. This presentation is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration.

By accessing this presentation, you accept that this disclaimer and any claims arising out of the use of the information from this presentation shall be governed by the laws of India and only the courts in India, and no other courts, shall have jurisdiction over the same.

33

INDIA

44

Our Portfolio: India

Mobile Services Homes BroadbandAirtel Business

#2 Telecom Operator in India #1 Enterprise Telco in India #1 Private Broadband Operator

Payments Bank

16 M+ Customers Among Top Passive Infra Provider ~50 M Banking Customers

Digital TV Tower Infra

55Above figures are for FY19, Pre-IFRS

Our Portfolio: India

Mobile Business

Customers (M) 283

Revenue (Rs Mn) 415,541

EBITDA % 22.7%

Homes Broadband

Customers (M) 2.3


EBITDA % 48.3%

Digital TV

Customers (M) 15.4


EBITDA % 38.3%

Airtel Business

Large Corporates ~2,000


EBITDA % 32.6%

66

Capex as % of Revenue

30% Revenue Collapse

Unprecedented Capex

30 Months of Turbulence

8Value Players

4Players

Indian Telecom Revenue

41%

2019

22

%

2016

$32 B

2017

$22

B

2019

Industry Consolidation

77

30% Revenue Collapse

Industry Consolidation

Explosive Data Usage (>10X)

Regulatory Shocks

Subsidies

Disruption

30 Months of Turbulence

Unprecedented Capex

88Airtel RMS includes Telenor from Q2’19 onwards and Tata Mobile Revenue from Q2’20 onwards; RMS is calculated on the basis of adjusted gross revenue including NLD. Source: TRAI

Airtel has held Market Share Despite all the Turbulence

99

132130

126

122120

100.0

105.0

110.0

115.0

120.0

125.0

130.0

135.0

100104

123

129 128

70.0

80.0

90.0

100.0

110.0

120.0

130.0

140.0

150.0

Q2'19 Q3'19 Q4'19 Q1'20 Q2'20

ARPU (Rs)

260272

264

284

100

120

140

160

180

200

220

240

260

280

300

FY16 FY17 FY18 FY19

Opex-India (Rs Bn)

Highest Industry ARPU Stripped $1.5B of waste

And we have done so Efficiently – Grown ARPU, Held Costs

10

Massive Operating Leverage with ARPU Recovery

100 104 128123

1,466 1,420

1,506 1,574 1,556

20.9% 19.1%24.1%

35.7% 36.3%

Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20

Revenues ($mn)

ARPU

(INR/Month)129

Driven by Bharti Airtel’s commitment to post-paid and high

value customers

Operational efficiencies from process re-engineering,

digitization and automation, and business simplification

Improvement in capex productivity through infrastructure

sharing, smart procurement, and adoption disruptive

technologies

ARPU Directly Linked to India Mobile EBITDAExpanding 4G Customer Base (Mn)

19.8

%

27.1

%

36.9

%

30.7

%

% of

Total

Custome

rs

33.9

%

65.7

77.1

86.8

95.2 103.0

Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20

Note: (1) Q1FY20 & Q2FY20 are post IndAS 116

(1) (1)

1111

Airtel Strategy

1212

Rewards to Customer Base of 150 Million Basis ARPU and Loyalty

People: One

Airtel

Powerful

PartnershipsWar on WasteSimplifyMicro MarketingServices at Scale

Brilliant

ExperienceQuality Customers

Quality Customers: Airtel Thanks

1313

Delivered through Aspirational TiersRewards that Customers Really Value

Best-in-class Content Premium Device Care

Affordable Financial Services Core Telecom Service

Quality Customers: Deliver Differentiated Services

People: One

Airtel

Powerful


Brilliant


1414

Mobile

Speed

Content

Surveillanc

e

People: One

Airtel

Powerful


Brilliant


Quality Customers: Own the Home, Converged Solutions

1515

Rapid Expansion Scale Data Centers

Grow SME, Expand Reach 10 Large, 120+ Edge DCs

Build New Verticals

More Products, Stronger Partnerships

People: One

Airtel

Powerful


Brilliant


Quality Customers: Accelerate Enterprise Business

16

29%

31%

25%

16%

Share of SpectrumMassive Spectrum Holdings Deployed for 4G

Jio +

RCom

BSNL

Airtel

VIL

People: One

Airtel

Powerful


Brilliant


Massive Spectrum Holdings Across All Bands

Including spectrum acquired from Tata with effect from July 1, 2019Table based on Unpaired spectrum

Spectrum band MHz spectrum Market Share (%)

800 and 900 MHz 255.3

Over 33% market

share in each of the

spectrum bands

1800 MHz 566.1

2100 MHz 340.0

2300 MHz 570.0

17

100K 4G sites in 2 years

Largest Ever Deployment

Augment current sites, VoLTE

Maximize 4G spectrum

3-5X Capacity Gain

Massive MIMO

Hyper capacity sites

Sectorization

2100

900

LAA – 5GHz

People: One

Airtel

Powerful


Brilliant


Multiple Solutions to Create Capacity

18

Extensive Fiber Roll-out

100 mbps 200 mbps 1 gbps

>70% of our Sites are 200+ Mbps

Extreme-scale Architecture

QPSK

8QAM

64QAM

16QAM

32QAM

100G to 400G

5G Ready Backbone Self Healing ‘IP over Photonics’

People: One

Airtel

Powerful


Brilliant


Backhaul Readiness for the Future

1919

Customer Level Performance

Digital Probes

Open & Transparent Telco

Proactive Customer Communication

We're getting better every day! A new 4G

tower has been added in Kailash colony K

Block. Now enjoy faster data speeds &

improve network coverage on your Airtel

4G

Tailored for Use Cases

Right Caching, Routing, Latency

People: One

Airtel

Powerful


Brilliant


Obsessed with Network Quality

2020

Data Speed

Continuously Recognized as Fastest 4G Network by Third Party

Resulting in a Brilliant Customer Experience

Q4'19 Q4'20

Network Complaints

-22%

People: One

Airtel

Powerful


Brilliant


*

* Expected

2121

Core TelcoNetwork Data Payments Distribution

Airtel Digital Services

We have built a Digital Ecosystem on Top of the Core Telco

Connectivity

Enabled by Partners

TEAM APIs

Connected Retail

>1Mn Retailers

Wynk Music

#1 App in India

Content

300 B Video streams

Airtel Thanks

>150 Mn Customers

Payments Bank

50 Mn Customers

Lending

100 Mn+ Credit scores

People: One

Airtel

Powerful

PartnershipsWar on WasteSimplifyMicro Marketing

Services at

Scale

Brilliant


2222

244 Priority Districts based on

Economic Potential (4G Market size)1

Capital Efficient (Revenue per

Tower)

2

Brand Affinity (Airtel 4G share)3

People: One

Airtel

Powerful

PartnershipsWar on WasteSimplify

Micro

MarketingServices at Scale

Brilliant


We Prioritize, Track and Drive Performance at a District Level

2323

Zero Tolerance on Faults Simplify Organization

War on Failures Fewer, Bigger Roles

Digitize Processes

Workforce Management

People: One

Airtel

Powerful


Brilliant


Dramatic and Bold Simplification

2424

T

E

A

M

Transparent Commercials

Ease of Integration on our Platform

Accelerated Adoption of Partner Propositions

Mutual Growth

Partnership Principles

People: One

Airtel

Powerful


Brilliant


Partnerships Play a Central Role in our Strategy Execution

2525

Indian Telecom now at a

decisive cusp

Summary

2626

AFRICA

2727

14 Countries

#2 Largest Telecom Operator in Africa(1)

in 12 out of 14 Markets(1)#1 #2or

Zambia

Nigeria

Gabon

Chad

Malawi

DRC

Niger

Madagascar

Uganda

Congo B Tanzania

KenyaRwanda

Seychelles

Nigeria

Rest of Africa

East Africa

Nigeria,

38.7%

East Africa,

35.6%

Rest of Asia,

25.7%

Contribution to Revenue (%) Q2FY20

Geographically Diverse

103mn+

Mobile

Subscribers

31mn+ Data

Subscribers

15.5mn

Airtel Money

Active Users

Financials

Reported Currency

$3,280mn H1FY20 Annualized revenue

$1,440mn H1FY20 Annualized EBITDA

2.3x Net Debt/EBITDA (including Lease obligation)

$3.2bn Sep’19 Net Debt

(includes Lease obligation of $1.2

bn)

Premium Listed London

Stock Ex FTSE 250

$3.8bn Market Cap (4th Dec’19)

One of the Leading Telcos & Mobile Money Platform

Notes: (1) Based on # of subscribers as of December 2018

2828

Airtel Africa

Leading Telecom operator in Sub

Saharan Africa

Scaled and well invested

Large growth opportunity ahead

Telecom

Dedicated platform of Airtel Money

Scalable, with low capital intensity

Sizable growth opportunity with

captive customer base

Payments

Airtel Africa: Two Opportunities in One

2929

Growing ahead of market to increase revenue market share

Airtel Money to become the currency of choice

Monetization of all revenue streams

To continue benefiting from operating leverage and effect of scale

Africa

Smart network for 4G

leadership

Quality

customers

Data

Airtel money

Multiple areas of

additional upside

Cost disciplinePeople Partnering the nation

Our Aspirations:

Clear Strategy for Growth

3030

Vo

ice

Da

taM

ob

ile

Mo

ne

y

Subscriber Base (mn) ARPU ($/sub/month) Revenue ($m)Gross

Revenue

$ 1,640 Mn+ 11.4% yoy

EBITDA

$ 719 Mn + 13.7% yoy

FCF

$ 237 Mn + 28.0% yoy

EBITDA Margin

43.9 % + 100bps

13.8%

14.9%

Africa

H1'19 H1'20

94.1

103.9

27.1

31.9

12.9

15.5

1.7 1.6

2.1

2.4

1.4

1.6

953.1 956.5

322.6

433.6

102.9

145.8

10.4%

19.9%

17.7%

(6.0%)

22.4%

18.5%

3.2%

37.8%

46.5%

Strong Set of Results Across the Business

1. Growth provided as constant currency growth 2. Voice revenue & corresponding ARPU in above charts are before inter-unit eliminations

3131

303 307 317 332 339 344 348372

751 736 745769 783 781 796

844

Q3FY18 Q4FY18 Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20

7 Quarters of Double-digit Revenue Growth and EBITDA Margin Expansion

Underlying EBITDA ($m)

Revenue ($m)

5.0%

40.4%

10.9%

41.7%

14.4%

42.6%

11.7%

43.2%

12.0%

43.3%

10.0%

44.0%

10.2%

43.7%

12.6%

44.1%

Underlying

EBITDA margin (%)

Revenue (Constant currency growth; %)

Track Record of Consistent Delivery

3232

Sustainable capital

structure

Efficient capital investments

Return cash to

shareholders

Reduction of leverage including

IPO proceeds to a leverage

target of 2.0-2.5x net debt /

EBITDA

The group’s Capex (excluding spectrum) to remain

stable at $ 600 – 700 Mn per annum

Clear dividend policy aiming to

distribute at least 80% of

consolidated FCF, subject to:

• Net debt to Underlying EBITDA

below 2.5x level

• Any regulatory/ statutory/

monetary/ other restrictions

H1’20: Interim dividend – $ 3c

per share

Transparent and Balanced Capital Allocation Policy

3333

CONSOLIDATED

3434

Financial Performance – Consolidated

Note: Consolidated numbers after inter-segment eliminations. Q1FY20 & Q2FY20 are post IndAS 1161. Operating expenses is the sum of (i) employee costs (ii) network operations costs and (iii) selling, general and administrative costs. Calculated using the FX rate of 1 USD = 70 INR.

Consol Revenues ($mn) EBITDA ($mn)

Consol Capex ($mn) Total Opex1($mn)

14,033 12,823

11,567

2,979 2,969

FY17 FY18 FY19 1QFY20 2QFY20

5,304

4,725

3,768

1,220 1,256


2,959

4,162 4,126

725 533


5,880 5,210

5,602

1,173 1,137


EBITDA Margin

36.8

% 32.5

%

41.0

%

37.8%

42.3%

India South

Asia Capex3,740 3,479

625

2,547

387

3535

Financial Performance – Quarterly Trends

Note: Consolidated numbers after inter-segment eliminations. Q1FY20 & Q2FY20 are post IndAS 116. Q1FY20 onwards DTH financials are impacted for accounting change.1. Quarterly segmented numbers are converted using the FX rate of 1 USD = 70 INR.

1,502 1,493

1,557 1,590 1,583

2QFY19 3QFY19 4QFY19 1QFY20 2QFY20

964 931 910 899 626


818

855

799 803

845


Airtel Consolidated

31.2

%

33.0

%

42.3

%

31.5

%

41.0

%

EBITDA

Margin

Mobile Services

India + SA

Revenues ($mn)

Africa

EBITDA

Margin

37.0% 39.2% 44.1

%37.1

%

38.9

%

India – Other

Segments

(Tower Infra, Home

Services, DTH, Airtel

Business)

Revenues ($mn)

Revenues ($mn)

2,882

2,819

2,919

2,979 2,969


Revenues ($mn)

38.6% 38.4% 53.2

%

38.5

%

42.6

%

19.0% 23.9% 36.1

%

26.1

%

23.3

%

3636

Further Avenues of Monetization Exist Such as Sell-down in Towers, Fibre, DTH

Sep 2014; Oct 2015 May 2017 Dec 2017 Jan - Nov 2018 May 2019 June 2019Feb 2015 Aug 2017; Nov 2017 Total

Africa tower sales

and divestment

c.$3 bn

Infratel stake sale

to KKR, CPPIB

c.$952 mn

DTH partial stake

sale to Warburg

Pincus

c.$235 mn

Airtel Africa Pre-

IPO placement

Africa

c.$1,450 mm

Issuance of equity

shares by way of

rights issue

c.$3,613 mn

IPO of Airtel Africa

unit, Listing on LSE

& Nigerian Stock

Exchange

c.$674 mn

Africa

Monetization of

stake in Bharti

Infratel

c.$311 mn

Monetization of

stake in Bharti

Infratel

c.$910 mn

c.$11.1 bn of

equity capital

raised in the

last 5 years

Spectrum Liabilities

32.4%

Long Term Liabilities

34.8%

Finance Lease

Obligations

22.0%

Short Term Liabilities

10.9%

9.36.2

6.4

6.3

FY19 Q2FY20

External Net Debt Spectrum Debt

15.612.5

Recently Issued Perpetual Bond in Network i2i of USD 750mn at 5.65%

Recent Activities Undertaken

Diversified

Gross Debt

Profile

(Q2FY20)

Reduction in

Net Debt

(excluding

Lease

Obligations)(1)

(US$ bn)

Timely Equity Infusions & Diversified Debt Profile

1. Excludes lease obligation liabilities of $4.2bn

https://www.google.co.uk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=2ahUKEwijqabumM_fAhWnwAIHHXk_AOwQjRx6BAgBEAU&url=https://www.thehindubusinessline.com/info-tech/co-location-exits-drag-bharti-infratel-net-down-to-600-cr/article25312781.ece&psig=AOvVaw1n0kN4x-3lEVbxPJXBgVV8&ust=1546521803205251

http://www.google.co.uk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=2ahUKEwicmvaBms_fAhVD0RoKHVq2CvwQjRx6BAgBEAU&url=http://ai.seo-usa.org/partners/warburg-pincus/&psig=AOvVaw3ouFUizK6wAZp_2UJxEkvz&ust=1546522123741908

http://www.google.co.uk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=2ahUKEwiM0fGNmc_fAhUB-aQKHaB5BZEQjRx6BAgBEAU&url=/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&ved=&url=https://solace.com/customer-profile/airtel&psig=AOvVaw3FSOsJEPTgINUINI_2Z4pe&ust=1546521873376954&psig=AOvVaw3FSOsJEPTgINUINI_2Z4pe&ust=1546521873376954





3737

THANK YOU

december 2019 - airtel india...2 disclaimer the information contained in this presentation is...

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